Tips for Buying a Home in a Seller's Market
| Posted in Bank Blogs
Investors know all too well, markets fluctuate. So, if you're thinking about investing in a home, you need to understand that there are good and not-so-good real estate markets for buying. A buyer's market, when inventory is high and prices are lower, is an optimal time to purchase.
But then, there's the other side: the seller's market.
In a seller's market, inventory is depleted, competition is high, prices are elevated, and the negotiating power belongs to sellers.
Rest assured, you can still buy a home in a seller's market. You just need to take some important steps:
- Choose an experienced real estate agent. A seasoned agent should be familiar with changing market conditions and may be able to provide guidance and recommendations to help put you in a stronger competitive position to get the home you want.
- Get pre-approved for a mortgage. You should obtain a pre-approval even before you find a home. With a pre-approval, a qualified lender will take your application and review your creditworthiness to determine if you could qualify for a loan. A pre-approval tells the seller that you're a serious buyer.
- Stay on top of listings. In a seller's market, inventory goes fast. That's why it's critical for you to be notified quickly about homes coming on the market. Have your real estate professional send you alerts and tell people in your network to inform you about any houses that they think may be coming on the market.
- Put your best offer forward. In a seller's market, competition is intense. So, it's not uncommon for there to be multiple offers on a single property. To ensure you have a chance to compete, bring your best offer forward, either by offering full price or even more in certain circumstances.
- Establish and stick to your budget. Buying a home is a huge investment, which is why it's so important to establish a monthly budget – even if you qualify for a larger mortgage. The last thing you want to do is get in a pricing war that has you overpaying for a home that will strain your budget.
- Offer the seller other perks. If you can't compete on price, you may be able to compete on flexibility. For example, maybe you allow the home purchase to be contingent on the seller finding a home. Or extend the closing date to give the seller more time to get their affairs in order. Some people even consider waiving an inspection, though this is not recommended.
- Adjust your expectations. We all want the home that checks all the boxes – the perfect neighborhood, kitchen, yard, etc. But usually home buying, even in buyer's markets, is about adjusting your expectations. In a seller's market, when inventory is low, you may have to make a few more concessions
- Wait it out. If you find yourself on the losing end of bidding wars or unable to find homes that meet your criteria, consider delaying your purchase till the real estate market improves. The challenge, of course, is predicting when that may happen.
Buying in a seller's market isn't easy but with a little planning, you can do it!